CLSA upgrades L&T stock to ‘outperform’

Brokerage CLSA on Thursday upgraded Larsen & Toubro (L&T) from `underperform' to `outperform', after the company announced good earnings for the December quarter and said it was confident of meeting its target of new orders in the current fiscal.

Upgrading the L&T stock, CLSA said government's favorable policies and expected cuts in interest rates would be reflected in the engineering & construction giant's earnings by the second half of current fiscal.

L&T announced a year-on-year jump of 13 per cent in net profit for the October to December quarter to 1,122 crore. Revenues jumped 10.2 per cent to settle at 15,581 crore.

Analysts polled by Thomson Reuters had projected average net profit at 1,079 crore on revenues of 16,096 crore.

However, the Ebitda margin from the company's core operations declined 1 per cent quarter-on-quarter to 9.6 per cent.

After losing more than 6.5 per cent in the last one month and 2 per cent in the early morning trade on Thursday, the stock gained 1.56 per cent after the announcement of the quarterly results.

Previously, a number of brokerages like Citigroup, Bank of America Merrill Lynch, Credit Suisse and Nomura had downgraded the stock.